Ex-union leader who extorted members sent to prison

A former union leader who “imposed a climate of fear” by shaking down union employees for kickbacks will spend two years in prison and is on the hook to pay $250,000 in restitution to his victims.

John Hamilton, former head of the Operating Engineers Local 324, was sentenced in federal court Wednesday by U.S. District Judge Bernard Friedman.

Hamilton, 63, of Ocala, Florida, had been convicted of conspiring to commit extortion.

“Hamilton .... imposed a climate of fear by coercing business agents and other employees of Local 324 to each pay him kickbacks of over $5,000 from their salaries per year into what was called the ‘Team Hamilton Slate Fund,’” Matthew Schneider, head of the Detroit U.S. Attorney’s Office, said in a press release.

“Ostensibly, the slate fund was to be used for union election campaign expenses,” Schneider said. “However, Hamilton instead used a significant portion of the money that was forced from union business agents for his own personal benefit.”

Authorities said Hamilton threatened to fire union employees if they complained about having to make payments to his slate fund. “In fact, in 2010, Hamilton fired one business agent who had complained about the payments to Hamilton’s fund,” Schneider said.

“Hamilton used some of the money that he extorted to pay for meals and liquor, as well as $5,000 to his daughter as a wedding present,” Schneider said. “After losing re-election in an August 2012 membership vote, Hamilton then proceeded to pocket for himself $71,000 from his slate fund, as well as distributing over $35,000 each to Steven Minella and David Hart, two other top Local 324 officials.”

“Instead of humbly recognizing the fiduciary trust with which he had been granted, Hamilton viewed his position as a way to enrich himself through extortion,” Assistant U.S. Attorneys David Gardey and Dawn Ison wrote in a federal court filing.

Federal authorities got wind of Hamilton’s crimes during another investigation involving Chicago money manager John Orecchio, who admitted misappropriating more than $24 million from Detroit-area union pension funds and investors.

Orecchio spent the stolen money on private jet flights, $1 million worth of concert and sports tickets, and jewelry. He also spent prodigious amounts of money in a Detroit strip bar and bought a Michigan horse farm for his girlfriend, an exotic dancer.

Orecchio, 52, a partner in private equity fund AA Capital Partners, cooperated with federal investigators who were looking into union and Detroit City Hall corruption.

Orecchio told the FBI he paid $10,000 to the nonprofit Kilpatrick Civic Fund — money he understood would go directly to then-mayor Kwame Kilpatrick — to try to get a city pension fund to invest $20 million with his company.

The investment was approved, although the deal eventually fell through.

Orecchio was convicted in February 2010 of fraud and theft and was sentenced to more than nine years in federal prison. He is scheduled to be released from a New York halfway house in October.

The Orecchio case led the FBI to Hamilton. FBI agents were looking into whether Orecchio and others paid bribes and kickbacks to the union leader, court records show.

Hamilton was indicted in December 2015 on charges of extortion, embezzlement, money laundering and conspiracy.

Hamilton was the union’s elected business manager from 2003 to September 2012. He had authority to fire anyone for any reason, prosecutors said.

“By all accounts, Hamilton was an old school union boss who aggressively used his power as the leader of the union to dictate the operations of the union,” prosecutors wrote in a court filing.

As boss, Hamilton gave himself a $90,000 raise, raising his annual salary to $250,000, prosecutors said. He also orchestrated an extortion conspiracy to force and intimidate three dozen union leaders into each contributing $5,200 per year into his “Team Hamilton Slate Fund.”

The conspiracy generated more than $500,000 from 2009 to August 2012, when Hamilton lost re-election, officials said.

“The business agents knew that if they refused to pay into the fund, Hamilton would immediately terminate them, and they and their families would be left without a job or income,” prosecutors wrote.

The money was supposed to pay for union re-election efforts for Hamilton and his slate of candidates. Instead, Hamilton used some of the money for personal expenses, according to the government.

“This union official created a climate of fear of retaliation against the hardworking men and women of the union, all for his personal gain,” Schneider said. “The court’s sentence today sends a strong message that union officials who abuse their positions of trust to personally profit will face significant punishment.”